What is Donated assets (business entities)?
In short
A business that receives an asset as a gift from a non-owner, such as land from a city to attract a plant, records the asset at fair value and recognizes a gain or revenue.
Key takeaways
- Assets contributed by shareholders are credited to paid-in capital instead.
- Donated assets are depreciated over their useful lives like purchased assets.
- A business that gives an asset away recognizes an expense at fair value and a gain or loss on the asset.
Where it's tested
FAR: Property, Plant & Equipment — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under US GAAP, a long-lived asset held for use is tested for impairment. The carrying value is $500,000, undiscounted future net cash flows are $520,000, and fair value is $460,000. What impairment loss, if any, should be recognized?